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Explain the consumption function for a closed economy with a government sector
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- What are the effect of taxes on saving and consumption of less income people in low income economies.Classify each of the following based on the macroeconomic definitions of saving and investment.Question 9 Which of the following is the best example of an economic investment? Apple builds a new plant to manufacture iPads in California. Your college purchases a 5-year old building in order to offer more classes A retiree purchases U.S. Treasury bonds A company like Bank of America acquires another company like Merrill Lynch
- The following equations describe a small economy. Figures are in millions of dollars; interest rate (i) is in percent per annum. Assume that the price level (P) is fixed. Goods Market C = Co + cYD (Private consumption) YD = Y + TR – T (Disposable income) T = To + tY (Total taxes) I = Io – bi (Private investment) G = Go, TR = TRo (Gov. Expenditure and Transfers, respectively) Y = C + I + G (Goods mkt. equilibrium condition) Money Market L = kY- hi (Demand for real balances) Ms = Mo/P (Real money supply) L = Ms (Money mkt. equilibrium condition) Endogenous Variables: C, YD T, I, Y, L, Ms and i Exogenous Variables: Co = 300, To = 80, Io = 450, Go = 300, TRo = 100, Mo = 350, P =1 Parameters: c = 0.85, t = 0.15, b = 50, k = 0.25 and h = 62.5 Policy…Consider the following economy C=1000+0.4(Y-T) 1=500 T=400 G=300 What is the investment of equilibrium?The economy of Ghana has a saving function S= - 100 +0.2Y, investment equal to 66, government expenditure equal to 50, export equal to 20 and an import function of M= 0.1Y. (a). What is the consumption function of the economy (b). What is the aggregate expenditure function of the economy?
- Explain the relationship between output and income for both an individual and an entire economy.Holding everything else constant, an increase in the savings rate will reduce the level of consumption per worker. True FalseWrite the Total Spend equivalence in an open and governmental economy. (Variables will be written with their names, not abbreviations)